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OCR for page 422
For-Profit Enterprise in Health Care. 1986.
National Academy Press, Washington, D.C.
Medical Staff Size, Hospital Pn~rileges, and
Compensation Arrangements: A Companson of
System Hospitals
Michael A. Momsey, Jeffrey A. Alexander, and
Stephen M. Shortell
INTRODUCTION
Since 1975, multihospital systems have grown
at a 3 to 4 percent annual rate (Ermann and
Gabel, 1984~. ~M any observers see fi~ndamen-
tal changes in the practice of medicine as a
result of this trend (Starr, 1982), particularly
in regard to the investor-ownecl (IO) systems
(Relman, 19801. Among the concerns are (1)
potential conflict of interest between the profit
motive and patient needs, (2) the ability of
investor-owned system hospitals to deliver care
in terms of the number and types of physicians
that affiliate with such hospitals, (3) the degree
to which IO system hospitals review pnvi-
leges, and (4) the nature of the financial re-
lationships between physicians and IO system
hospitals.
The first issue is beyond the range of this
paper. The remaining three are addressed in
descriptive fashion by comparing IO system
hospitals with freestanding hospitals and hos-
pitals in other types of systems. The analysis
uses available data from the American Hospital
Association (AHA). The following section de-
scubes the three data sets used. This is fol-
lowed by findings pertaining to Me number
and types of physicians, privilege criteria and
review, and compensation arrangements. A
concluding section discusses the implications
Dr. Morrisey is in the Department of Health Care
Organization and Policy and Dr. Alexander is in the
Department of Health Services Administration, both
at the University of Alabama at Birmingham. When
this paper was written they were with the Hospital
Research and Educational Trust, Chicago, Illinois. Dr.
Shortell is with the J. L. Kellogg Graduate School of
Management and Center for Health Services and Pol-
icy Research at Northwestern University, Evanston,
Illinois.
of the findings and makes suggestions for fur-
ther study.
DATA AND METHODS
Most of the medical staff data are drawn
from the 1982 AHA Survey of Medical Staff
Organization. This survey was mailed to 3,027
nonfederal, short-term, acute care hospitals in
the 48 contiguous states and the District of
Columbia. Because the survey was designed
to test the effects of regulation, the sample
hospitals were chosen by a 25 percent random
design augmented with additional hospitals in
22 states. These states were primarily those
with mandatory or voluntary rate-setting pro-
grams. The survey had an overall response rate
of 69.9 percent. Due to the sampling design,
the sample is not wholly representative of na-
tional data. The respondents are larger, more
likely to be from the Northeast, Middle At-
lantic, and West North Central regions, more
likely to have a teaching program, and less
likely to be IO hospitals (Shortell et al., 1985~.
Data on the size, specialty composition, and
physicians on the hospital payroll as well as all
control variables were taken from the 1982
AHA Annual Survey of Hospitals. This uni-
verse survey had an overall response rate of
89.9 percent.
The data on hospital system participation
are drawn from the 1982 AHA Validation Sur-
vey of Multihospital Systems. That survey col-
lected information on the hospitals participating
in the system, the date they joined, and the
type of participation (i.e., owned, leased,
sponsored, or contract-managed). To our
knowledge, this is the most complete file of
multihospital system hospitals in existence.
For purposes of this analysis, when two or
more hospitals are owned, leased, or spon-
sored by another entity, they are categorized
422
OCR for page 423
STAFF SIZE, PRIVILEGES, AND COMPENSATION
as being part of a system. System hospitals are
then subdivided by ownership: religious, sec-
ular nonprofit, public (i.e., owned by a state
or local government), and IO. Contract-man-
aged hospitals are given a unique category as
are freestanding hospitals. Federal hospitals
have been excluded. This yields six mutually
exclusive and exhaustive categories.
Two analyses are conducted for each vari-
able of interest. First, simple comparisons across
the six cells are presented. Statistical tests are
performed comparing IO system hospitals with
hospitals in each of the other cells. When the
variables are continuous, l-tests of means are
calculated; when the data are dichotomous,
chi-squared tests are used.
Second, regression techniques are used to
test for the same differences controlling for
system, hospital, region, and urban location
variables. Specifically, the equation controls
for
· System size (the number of hospitals in
the system);
· Staffed beds (the average number of beds
set up and staffed over the course of the year);
· Teaching status (number of interns and
residents on the hospital payroll);
· Northeast region (Connecticut, Maine,
Massachusetts, New Hampshire, New Jersey,
New York, Pennsylvania, Rhode Island, Ver-
mont);
· South region (Alabama, Arkansas, Dis-
trictofColumbia, Delaware, Florida, Georgia,
Kentucky, Louisiana, Maryland, Mississippi,
423
North Carolina, Oklahoma, South Carolina,
Tennessee, Texas, Virginia, West Virginia);
· North Central region (Illinois, Indiana,
Iowa, Kansas, Michigan, Montana, Missouri,
Nebraska, North Dakota, Ohio, South Dakota,
Wisconsin); and
~ Standard metropolitan statistical area
(SMSA) size (under 100,000, 100,000-250,000,
250,000-500,000, 500,000-1 million, 1 million-
25 million, over 25 million).
For exploratory purposes these equations
are estimated twice, once to allow comparisons
of all system types to freestanding hospitals
and once again to allow direct comparisons
with IO system hospitals. Equations empha-
sizing continuous dependent variables are es-
timated using ordinary least squares regression
techniques; dichotomous dependent variables
are analyzed using logit regression.
Means and standard deviations of all vari-
ables are found in Appendix Tables A-1, A-2,
A-3, and Am. Because different sample sizes
are available for different variables, four sets
of summary statistics are reported.
NUMBER AND TYPES OF PHYSIC~S
Table 1 presents data on the number of ap-
plications for medical staff membership re-
ceived in 1981. The average IO system hospital
received 16 applications. This is comparable
to freestanding and voluntary system hospi-
tals. However, publicly owned system hospi-
tals received twice that number of applications;
TABLE 1 Compulsion of Investor-O~ed System Hospitals with Other Ties of
Hospitals: How Many Physicians Applied for Active Stab Pnvileges During Calendar
Year 1981?
Investor
Owned Religious Nonprofit Public Contract
Systems Freestanding Systems Systems Systems Managed
Mean Mean Mean Mean Mean Mean
N(S.D.) N (S.D.) N(S.D.) N(S.D.) N (S.D.) N(S.D.)
. -
11716. 11 1,283 13.48 22319.22 5927.25 6 33.50** 1237.48***
(18.02) (20.71) (24.64) (51.62) (26.82) (10.90)
***I significant at p c .01 when compared to hospitals in investor-owned systems.
**T significant at p s .05 when compared to hospitals in investor-owned systems.
OCR for page 424
424
contract-managed hospitals only received 7.5
applications, on average.
These differences are related to differences
in hospital size, location, and teaching status.
When these factors are taken into account (Ap-
pendix Table A-5), it is only the secular non-
profit system hospitals that differ significantly
from IO system hospitals. They receive on av-
erage 5.2 more applications annually than do
IOs.
Table 2 shows that IO system hospitals ac-
cept a higher percentage of applicants (89. 76
percent) than does any other hospital group.
Appendix Table A-6 demonstrates that, con-
trolling for other factors, this difference is even
more pronounced. Nonprofit secular system
hospitals approve 12 percent fewer applica-
tions, religious systems 8.9 percent fewer, and
freestanding and contract-managed hospitals
approve over 11 percent fewer applications than
do IO system hospitals.
While IO system hospitals received and ac-
cepted more medical staffapplications in 1981,
these hospitals, nonetheless, had smaller med-
ical staffs than did other system hospitals (Ta-
ble 3A). However, the average of 91 physicians
in IO system hospitals is comparable to free-
standing hospitals and almost twice as large as
contract-managed hospitals. This result is
largely attributable to differences in hospital
size across system control. Table 3B reports
the number of physicians per 100 beds. When
measured on this basis, IO system hospitals
have over 61 physicians per 100 beds. This is
larger than contract-managed, freestanding,
and most system hospitals. Only voluntary sec
FOR-PROFIT ENTERPRISE IN HEALTH CARE
ular system hospitals have more active and
associate medical staff members per 100 hos-
pital beds. As Appendix Table A-7 reports,
however, while the relationship across hospital
types continues to hold when other factors are
introduced, it is only the public system, free-
standing, and contract-managed hospitals that
exhibit statistically significant differences from
IO system hospitals.
The specialty composition of the staff was
also examined, focusing on family practice, pe-
diatrics, general internal medicine, other
medical specialties, and general surgery. The
simple comparisons are reported in Table 4.
In general the IO system hospitals have as
many or more physicians per 100 beds as hos-
pitals in other categories. The principal ex-
cephon is in pediatrics where voluntary secular
system hospitals have more physicians. These
findings hold when other factors are entered
into the equations (Appendix Tables A-8, A-
9, A-10, A-11, and A-121. Interestingly, the
larger IO medical stabs appear to anse, in part,
Dom larger numbers of internists and other
medical specialists.
Table 5 reports the dependence of hospitals
on the top five admitters to the hospital. All
differences are statistically significant. Con-
tract-managed hospitals derived over 63 per-
cent of their a~nissions from five physicians
or physician groups; public system hospitals
only 12 percent. IO system hospitals fall in the
lower end of We range with approximately 40
percent of their admissions provided through
the top five admitters. When hospital size and
other factors are controlled (Appendix Table
TABLE 2 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: What Percentage of the Physicians Who Applied for Active StaR Privileges
During Calendar Year 1981 Were Accepted?
Investor
Owned
Systems Freestanding
Religious Nonprofit
Systems Systems
Public Contract
Systems Managed
Mean Mean Mean Mean Mean Mean
N(S.D.) ~(S.D.) N(S.D.) N(S.D.) N (S D) N (S.D.)
11789.76 19283 81.39*** 22386.75 5981.45 6 72.93 123 76.~***
(23.39) (34.99) (29. 1 ~(35.57) (39.62) (39.85)
***T significant at p s .01 when compared to hospitals in investor-owned systems.
OCR for page 425
STAFF SIZE, PRIVILEGES, AND COMPENSATION
425
TABLE 3A Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: How Many Practitioners (Total) Were on the Active or Associate Medical Staff
as of September 30, 1982?
Investor
Owned Religious Nonprofit Public Cont~act
SystemsFreestanding Systems Systems Systems Managed
MeanMean Mean Mean Mean Mean
N (S.D. ) N (S.D.) N (S.D.) N (S.D.) N (S.~.) N (S.D.)
395 91.03 3,453 90.32 538 144.07*** 232
(93.89) (140.32) (120.21)
169.47*** 31
(300.17)
286.65** 355
(449.59)
46.73***
(78.41)
***T significant at p s .01 when compared with hospitals in investor-owned systems.
**T significant at p ' .05 when compared with hospitals in investor-owned systems.
A-13), IO system hospitals have a lower con-
centration of admissions than do voluntary sec-
ular system hospitals and contract-mana~ed
facilities.
Finally, Table 6 reports the percentage of
the top five admitting physicians who are board
certified. With the exception of contract-man-
aged hospitals, which had a smaller percentage
of board-certified heavy admitters, there was
no statistically significant difference between
hospitals in IO chains and other types of hos-
pitals. This finding is born out by the multi-
variate analysis in Appendix Table A-14.
PRIVILEGES CRITERLt AND REVIEW
Although IO sytem hospitals accept more
applications (see Table 2), there is no statis-
tically significant difference in the proportion
of these hospitals Hat require at least some
specialties to be board certified (Table 7~. This
result holds when other factors are included
in the regression as well (Appendix Table A-
15~.
Recently reported AHA data indicate that
proprietary hospitals (not just IO system hos-
pitals) have a somewhat higher number of board-
certified staff members than do nonprofit hos-
pitals (28.8 per 100 beds versus 24.6 per 100
beds) (Amencan Medical Association, 19841.
This finding is consistent with earlier AHA
data. When earlier data are controlled for over
factors, however, the difference loses statis-
bcal significance (Morrisey, 1984~. Table 8 re-
ports the proportion of active and associate
medical staff members who were board cer-
hfied in 1982. Sixty-one percent ofthe medical
stab members of hospitals in IO chains were
board certified. This percentage is not statis-
dcally different from hospitals in most other
ownership control categories. Hospitals in re-
ligious systems had ahi~er proportion of board
TABLE 3B Comparison of Investor-Owned System lIospitals with Other Types of
Hospitals: How Many Practitioners (Total) Were on the Active or Associate Medical Staff
per 100 Staffed Beds as of September 30. 1982?
Investor
Owned
Systems Freestanding
Religious
Systems
Nonprofit Public Contract
Systems Systems Managed
Mean Mean Mean Mean Mean Mean
N(S.D.) N (S.D.) N (S. D ) N(S.D.) N (S. D.) N (S.D.)
39561.39 3~453 43.67*** 538 52.24*** 23266.03 31 61.61 355 36.97***
(55.57) (44.07) (36.79) (73.14) (51.98) (39.49)
***T significant at p ' .01 when compared to hospitals in investor-owned systems.
OCR for page 426
426
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OCR for page 427
STAFF SIZE, PRIVILEGES, AND COMPENSATION
TABLE 5 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: What Percentage of Total Admissions During Calendar Year 1981 Were
Admitted by the Five Highest Admitting Physicians?
Investor
Owned Religious
Systems Freestanding Systems
427
Mean Mean Mean
N (S.D.) N (S.D.) N (S.D.) N
Nonprofit Public Contract
Systems Systems Managed
Mean
(S.D.) N
Mean
(S.D.) N
Mean
(S.D.)
117 40.54 1,283 46.57** 223 32.65** 59 50.38* 6 12.38*** 123 63.56***
(27.47) (33.54) (28.61) (35.54) (2.22) (31.81)
***I significant at p ' .01 when compared with hospitals in investor-owned systems.
**T significant at p c .05 when compared with hospitals in investor-owned systems.
*T significant at p c .10 when compared with hospitals in investor-owned systems.
TABLE 6 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: What Percentage of Top Five Admitting Physicians Are Board Certified?
Investor
Owned Religious Nonprofit Public Contract
Systems Freestanding Systems Systems Systems Managed
Mean Mean Mean Mean Mean Mean
N(S.D.) N(S.D.) N(S.D.) N(S.D.) N (S.D.) N (S.D.)
11762.79 1,23660.98 22165.29 5760.61 6 65.00 121 52.66**
(35.34) (36.40) (33.44) (37.30) (28.11) (36.97)
**T significant at p c .05 when compared with hospitals in investor-owned systems.
ce~ied medical staff members, but this dif-
ference loses statistical significance in the mul-
tivanate analysis (Appendix Table A-161.
Further, IO system hospitals have longer
probationary periods for new medical staff
members than do either freestanding or con-
tract-managed hospitals (Table 91. System hos
pitals, across Me board, are similar in this
respect. These differences disappear, how-
ever, when other factors are considered (Table
A-17). The differences appear to be largely
attributable to hospital and community size.
While no data are available from AHA sur-
veys pertaining to utilization review and qual
TABLE 7 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: Is Board Certification Required for Any (or Ad) Specialties on Your Hospital's
Active Stat
Investor
Owned
Systems
Religious
Freestanding Systems
Nonprofit Public Contract
Systems Systems Managed
N % N % N % N %N % N %
l
Yes 35 29.91 396 30.87 54 24.22 20 33.902 33.33 29 23.58
No 82 70.09 887 69.13 169 75.78 39 66.104 66.67 94 76.42
Total 117 100.00 1,283 100.00 223 100.00 59 100.00 6 100.00 123 100.00
OCR for page 428
428
FOR-PROFIT ENTERPRISE IN HEALTH CARE
TABLE 8 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: What Proportion of Active and Associate Medical Staff in the Hospital Are
Board Certified?
Investor
Owned
Systems Freestanding
Mean
N (S.D.)
348 0.61
(0.22)
N
3,062
Mean
(S.D.)
0.61
(0.35)
Religious Nonprofit
Systems Systems
N
Mean
(S.D.) N
500
0.65***
(0.26)
204
Mean
(S.D.) N
0.65
(0.41)
Public
Systems
30 0.58
(0.24)
***T significant at p s .01 when compared with hospitals in investor-owned systems.
ity assurance activities of different types of
hospitals, some descriptive data are available
from a recent AMA survey (1984~. They report
that a somewhat higher percentage of pro-
prietary (not just IO system) hospitals formally
review clinical decisions than do nonproprie-
taryhospitals (83 percent versus 79.8 percent).
A somewhat lower percentage of proprietary
hospitals set guidelines to reduce length of stay
(65.9 percent versus 71.8 percent); review
length of stay after discharge (84.9 percent ver-
sus 90.1 percent); attempt to reduce the num-
ber of treatment procedures that physicians
prescribe (26.7 percent versus 32.2 percent);
and review the range of services that the hos-
pital provides (6.7 percent versus 9.5 percent).
COMPENSATION ARRANGEMENTS
Table 10, based on AHA annual survey data,
compares the number of full-time and part
Contract
Managed
Mean
N (S.D.)
304 0.58
(0.25)
time physicians and dentists employed by the
hospital in a clinical capacity. On average, public
system hospitals employ over 80 physicians.
Freestanding hospitals employ approximately
seven physicians. All private voluntary system
hospitals employ similar numbers. However,
IO system hospitals employ less than one phy-
sician, on average. With the exception of the
public system hospitals, none of these differ-
ences remain when one controls for hospital
size, teaching commitment, and location (Ap-
pendix Table A-181. That is, except for public
system hospitals, hospitals are quite similar in
their employment of physicians.
Hospital-based physicians have historically
had the greatest direct financial affiliation win
hospitals. These affiliations involve employ-
ment, form of compensation, and billing ar-
ran~ements. Tables 11 and 12 report the
available data from the AHA Survey on Med-
ical Staff Organization on the form of compen
TABLE 9 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: What Is the Usual Number of Months for Provisional Appointment Before a
Physician Is Awarded Full Privileges?
Investor
Owned Religious Nonprofit Public Contract
Systems Freestanding Systems Systems Systems Managed
-
Mean Mean Mean Mean Mean Mean
N (S.D.) N (S.D.) ~(S.D.) N (S.D.) N (S.D.) N (S.D.)
. .
7 9.62 1,283 8.80* 223 10.41 so 9.44 6 11.00 123 7.85***
(I 54! ts.29) (4.98) <5.15) `2.45) t4.2s'
***T significant at p 5 .01 when compared with hospitals in investor-owned systems.
*T significant at p 5 .10 when compared with hospitals in investor-owned systems.
OCR for page 429
STAFF SIZE, PRIVILEGES, AND COMPENSATION
TABLE 10 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: How Many Full-Time and Part-Time Physicians and Dentists Were on the
Hospital Payroll as of September 30, 1982?
429
Inv es to r
Owned Religious Nonprofit Public Contract
Systems Freestanding Systems Systems Systems Managed
Mean Mean Mean Mean Mean Mean
N (S.D.) N (S.D.) N (S.D.) N (S.D.) N (S.D.) N (S.D.)
395 0.28 3~453 6.91*** 538 5.87*** 232 7.77*** 31 80.48*** 355 1.03**
(1.58) (30.67) (14.91) (22.94) (150.90) (5.25)
***I significant at p s .01 when compared with hospitals in investor~wned systems.
**I significant at p s .05 when compared with hospitals in investor-owned systems.
sation for anesthesiologists and radiologists. The
results are similar 57 percent of public sys-
tem hospitals compensate their physicians on
a salary basis, and the remainder use an out-
put-based arrangement such as a percentage
of revenue, or the hospital or patient pays on
a fee-for-service basis. Approximately 12 per-
cent of freestanding and contract-managed
hospitals use salary compensation. Secular
nonprofit system hospitals are somewhat more
likely and religious systems somewhat less likely
to use salary arrangement than are freestand-
ing hospitals. In marked contrast, IO system
hospitals almost never use a salary form of
compensation. These relationships are gen-
erally supported in the multivariate compari-
sons (Appendix Tables A-l9 and A-20.
The form of compensation for pathologists
is summarized in Table 13. Much larger pro-
portions of hospitals of all types compensate
these physicians with salary arrangements. It
is still the case, however, that a smaller pro-
portion of IO system hospitals use the salary
form. The statistically significant differences
with IO system hospitals are maintained only
for religious and public system hospitals once
over factors are considered (Appendix Table
A-211.
Finally, Tables 14, 15, and 16 report the
degree to which the hospital bills for physician
services as one moves from anesthesiology to
radiology to pathology. As with other mea-
sures of financial involvement with physicians,
IO system hospitals are least likely to bill pa-
tients for physician services. In this regard Hey
are most like religious system hospitals and
least like freestanding hospitals anal public sys-
tem hospitals. These differences persist when
other factors are controlled (Appendix Tables
A-22, A-23, and A-24.
. . .
TABLE 11 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: What Is the Primary Form of Compensation for Anesthesiologists?a
Investor
Owned Religious Nonprofit Public Contract
Systems Freestanding Systems Systems Systems Managed
N % N % N % N % N To N %
Yes 78 98.73 785 88.40*** 143 94.70 33 82.50*** 3 42.86*** 61 88.41**
No 1 1.27 103 11.60*** 8 5.30 7 17.50*** 4 57.14*** 8 11.59**
Total 79 100.00 888 100.00 151 100.00 40 100.00 7 100.00 69 100.00
ayes = percent of revenue or fee-for-service; no = straight salary; "other" types not included.
***Chi-square significant at p ' .01 when compared with hospitals in investor-owned systems.
**Chi-square significant at p c .05 when compared with hospitals in investor-owned systems.
OCR for page 430
430
FOR-PROFIT ENTERPRISE IN HEALTH CARE:
TABLE 12 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: What Is the Primary Form of Compensation for Radiologists?a
Investor
Owned Religious Nonprofit Public Contract
Systems Freestanding Systems Systems Systems Managed
N % N %N % N % N % N
Yes 77 97.47 782 88.06**146 96.69 34 85.00** 3 42.86*** 66
No 2 2.53 106 11.94**5 3.31 6 15.00** 4 57.14*** 3
Total 79 100.00 888 100.00151 100.00 40 100.00 7 100.00 69
151 100.00 40 100.00
ayes = percent of revenue or fee-for-service; no = straight salary; "other" types not included.
***Ch~-square significant at p s .01 when compared with hospitals in investor-owIled systems.
**Ch~-square significant at p c .05 when compared with hospitals in investor-owned systems.
DISCUSSION
After controlling for system size, hospital
size, teaching activity, region of the country,
and SMSA size, IO system hospitals tend to
differ from other times of ha~r~ital~ in the fill
lowing ways:
, ~_ ~
~ .,
1. They accept a somewhat higher per-
centage of medical staffapplications than other
types of hospitals.
2. They take essentially the same time to
review physician performance before award-
ing field privileges as do other hospitals.
3. They have a larger number of physicians
per bed.
4. They have a larger number of internists
and other medical specialists than other hos-
pitals, but fewer pediatricians than secular
nonprofit hospitals.
5. They experience less concentration of ad
%
95.65
4.35
100.00
missions than secular nonprofit hospital sys-
tems and contract-managed hospitals, but are
similar to other hospitals.
6. They are less likely to have salaried ar-
rangements with anesthesiologists, patholo-
gists, or radiologists.
7. They are more likely to have hospital-
based specialists directly bill for services.
On all other dimensions investigated, IOs
are essentially similar to other types of hos-
pitals, whether system owned or freestanding.
Because the study is descriptive and ex-
ploratory, no firm conclusions can be drawn.
~ reference to the original three issues (i.e.,
number and types of physicians, privilege cri-
teria and review process, and compensation
arrangements), the data do suggest the follow-
ing observations and raise several questions
for fixture investigation.
TABLE 13 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: What Is the Primary Forrn of Compensation for Pathologists?a
Investor
Owned
Systems
N %
Freestanding
N %
Religious Nonprofit
Systems Systems
N %
Yes 67 84.81 56863.96*** 9965.56*** 27
No 12 15.19 32036.04*** 5234.44*** 13
Total 79 100.00 888100.00 151100.00 40
N %
67.50*
32.50*
100.00
Public
Systems
N % N
2 28.57*** 58
5 71.43*** 11
7 100.00 69
Contract-
Managed
84.06
15.94
100.00
ayes = percent of revenue or fee-for-service; no = straight salary; "other" types not included.
***Chi-square significant at p ' .01 when compared with hospitals in investor-owned systems.
*Chi-square significant at p ' .10 when compared with hospitals in investor-owned systems.
OCR for page 431
c
STAFF SIZE, PRIVILEGES, AND COMPENSATION
TABLE 14 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: Do Your Anesthesiologists Bill Patients Directly?
Investor
Owned Religious Nonprofit Public Contract
Systems Freestanding Systems Systems Systems Managed
N % N % N % N % N % N %
Yes 89 85.58 805 69.52*** 170
No 15 14.42 353 30.48*** 32
Total 104 100.00 1,158 100.00 202
84.16 3768.52**
15.84 1731.48**
100.00 54100.00
550.00**
550.00**
10100.00
***Chi-square significant at p c .01 when compared with hospitals in investor-owned systems.
**Chi-square significant at p c .05 when compared with hospitals in investor-owned systems.
Medical Staff Size and Composition
The fact that IO system hospitals have a
somewhat greater number of physicians per
100 bells and accept a higher percentage of
applications to their staff suggests that they
have at least as "adequate" a supply of medical
staff resources as do other hospitals. If any-
thing, IOs are expanding their medical staffs
at a faster rate since the volume of applications
to their staffs is comparable to other types of
hospitals. It is not known whether the larger
number of medical specialists per 100 beds is
a matter of deliberate policy on the part of IO
systems or more a reflection of the mix of phy-
sicians available in the communities in which
IO system hospitals have located.
Among the questions for discussion and fu-
ture exploration are the following:
· Do the larger staffs give IO system hos-
pitals greater or lesser flexibility to expand or
contract their service mix relative to other hos-
pitals?
437
54
45
99
· Does the greater percentage of applica-
tions accepted suggest that IO system hospi-
tals are "out-competing" other hospitals for the
increasing supply of physicians? What are the
implications for the type, volume, and quality
of services that are offered to the community?
· Does the clinical behavior of physicians
differ between those primarily affiliated with
IO system hospitals versus those primarily af-
filiated with other types of hospitals? Diag-
nosis-specific, physician-specific data are
needed to address these issues.
Privilege Criteria and Review
This study indicates that at least as many IO
system hospitals require board certification as
a requirement of medical staff membership as
do other hospitals. Combined with the other
data indicating that IO system hospitals have
a percentage of physicians who are board cer-
tified similar to that of nonproprietary hospi-
tals, this suggests that IOs exhibit as much
TABLE IS Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: Do Your Radiologists Bill Patients Directly?
Investor
Owned Religious Nonprofit Public Contract
Systems Freestanding Systems Systems Systems Managed
N % N % N % ~To N % ^N %
To
Yes 87 83.65 63054.40*** 155
No 17 16.35 52845.60*** 47
Total 104 100.00 1,158100.00 202
33
21
100.00 54
61. 11*** 5
38.89*** 5
100.00 10
50.00** 58
50.00** 41
100.00 99
58.59***
41.41***
100.00
***Chi-square significant at p s .01 when compared with hospitals in investor-owned systems.
**Chi-square significant at p s .05 when compared with hospitals in investor-owned systems.
OCR for page 432
432
FOR-PROFIT ENTERPRISE IN HEALTH CARE
TABLE 16 Comparison of Investor-Owned System Hospitals with Other Types of
Hospitals: Do Your Pathologists Bill Patients Directly?
Investor
Owned
Systems
Freestanding
N % N %
Religious Nonprofit Public
Systems Systems Systems
N % N
% N %
Cont~act-
Managed
N
%
Yes 56 53.85 20017.27*** 5125.25*** 1527.78*** 110.00** 2828.28***
No 48 46.15 95882.73*** 15174.75*** 3972.22*** 990.00** 7171.72***
Total 104 100.00 1,158100.00 202100.00 54100.00 10100.00 99100.00
***Chi-square significant at p ' .01 when compared with hospitals in investor-owned systems.
**Chi-square significant at p c .o5 when compared with hospitals in investormwned systems.
concern for attracting competent physicians as
do other hospitals. This is further supported
by the fact that IO system hospitals generally
have as long a probationary period before
granting full privileges as do other hospitals.
Among the questions for discussion and fu-
ture examination are the following:
· Beyond meeting the basic structure and
process accreditation standards of the loins
Commission on Accreditation of Hospitals, it
would be useful to know what additional qual-
ity assurance mechanisms are used by differ-
ent types of hospitals.
· Given competitive and cost-containment
pressures, it would be useful to know the de-
gree to which cost-effective physician perfor-
mance will be used as a criterion for granting
and renewing clinical privileges, and the ex-
tent to which this may differ across types of
hospital ownership.
· Carefully designed outcome studies that
control for differences in case mix and other
relevant variables are also needed to identify
the degree to which there may be differences
in the quality of care provided by different
types of hospitals.
Compensation Arrangements
The fact that IO hospitals are less likely to
have salaried relationships with their hospital-
based specialists and more likely to have their
physicians bill directly for their services sug-
gests looser financial relationships between IO
hospitals and these specialists. This may result
from a philosophy of promoting physician au
tonomy and, under cost-based reimburse-
ment, may also have been viewed as financially
advantageous.
Among the questions for discussion and fu-
ture exploration are the following
~ The looser financial relationships may be
the result of the regulatory environments in
which IO system hospitals have located to date.
It would be useful to know whether the new
SIedicare prospective payment system has
changed these relationships.
· Does the new payment system, the in-
creased number of physicians, and the appar-
ent emergence of price competition suggest
that new compensation arrangements are being
developed between hospitals and physicians?
If so, are arrangements likely to diEer by hos-
pital ownership. What implications do they
have for the cost, volume, and quality of the
service provided?
The relationships between hospitals and
physicians are complex and rapidly changing
as a result of changes in the environment. This
exploratory study has documented some ofthe
differences in relationships, but, in the end,
has posed many more questions for fixture work.
ACKNOWLEDGMENTS
This paper was funded, in part, by contract
0557~176 from the Institute of Medicine, Na-
honal Academy of Sciences, to the Hospital
Research and Educational Trust. The opinions
and conclusions expressed herein are solely
those of the authors. The authors thank Robert
OCR for page 447
STAFF SIZE, PRIVILEGES, AND COMPENSATION
TABLE A-14 Percentage of Top Five Admitting Physicians Who Are Board Certified
447
System Control Coefficients Relative to
Freestanding Hospitals
Variables
Investor-Owned Systems
Coefficient Standard Error Coefficient Standard Error
Freestanding hospitals -2.61 4.27
System characteristics
System control
Religious nonprofit0.70 2.63- 1.91 4.73
Secular nonprofit-3.86 4.82- 6.47 6.14
Investor-owned2.61 4.27
Public-4.43 14.59-7.05 15.07
Contract-managed- 5.68 3.91- 8.30 4.67
System size0.01 0.020.01 0.02
Hospital characteristics
Number of beds4.94 0.67***4.94 0.67
Regional location
Northeast-2.75 2.76- 2.75 2.76
South- 7.87 2.60***- 7.87 2.60
North Central- 6.30 2.49**- 6.30 2.49
SMSA sizea
Under 100,00011.14 6.8211.14 6.82
100,000-250,0004.36 3.154.36 3.15
250,000-500,000-2.25 3.20-2.25 3.20
500,000-1 million- 1.53 3.43- 1.53 3.43
1 million-2.5 million0.72 2.780.72 2.78
Over 2.5 million0.02 2.950.02 2.95
House staE-0.03 2.41- 0.03 2.41
Constant56.06 2.30***S8.67 4.51
Model statistics
R2 0.067 0.067
N 1,758 1,758
aSize of standard statistical metropolitan area (SMSA).
***T is significant at p s .01.
**T is significant at p s .05.
*T is significant at p s .10.
OCR for page 448
448
FOR-PROFIT ENTERPRISE IN HEALTH CARE
TABLE A-15 Is Board Certification Required for Any (or All) Specialties on Your
Hospital Active Staff?
System Control Coefficients Relative to
Freestanding Hospitals
Variables
Investor-Owned Systems
Coellicient Standard Error Coefficient Standard Error
Freestanding hospitals -0.08 0.28
System characteristics
System control
Religious nonprofit-0.33 0.18*- 0.41 0.31
Secular nonprofit0.20 0.300.12 0.39
Investorowned0.08 0.28
Public-0.50 0.90-0.58 0.93
Contract-managed-0.06 0.26-0.13 0.31
System size-0.00 0.00- 0.00 0.00
Hospital characteristics
Number of beds0.10 0.04**0.10 0.04
Regional locations
Northeast0.78 0.18***0.78 0.18
South0.67 0.18***0.67 0.18
North Central0.45 0.17***0.45 0.17
SMSA sizea
Under 100,0000.53 0.400.53 0.40
100,000-250,0000.09 0.200.09 0.20
250,00.0-500,0000.18 0.200.18 0.20
500,000-1 million0.20 0.210.20 0.21
1 million-2.5 million0.37 0.17**0.37 0.17
Over 2.5 million0.64 0.18***0.64 0.18
House staB0.21 0.150.21 0.15
Constant-1.78 0.16***-1.70 0.30
Model statistics
Pseudo R 0.17 0.17
N 1,811 1,811
aSize of standard statistical metropolitan area (SMSA).
***T is significant at p s .01.
**T is significant at p 5 .05.
*T is significant at p s .10.
. .
OCR for page 449
STAFF SIZE, PRIVILEGES, AND COMPENSATION
449
TABLE A-16 Proportion of Active and Associate Medical Staff Who Are Board Certified
l
System Control Coefficients Relative to
Freestanding Hospitals
Vanables
Investor-Owned Systems
Coefficient Standard ErrorCoefficient Standard Error
Freestanding hospital 0.02 0.02
System characteristics
System control
Religious nonprofit0.02 0.020.04 0.03
Secular nonprofit0.02 0.020.04 0.03
Investor-owned-0.02 0.02
Public-0.11 0.06*-0.09 0.06
Contract-managed-0.02 0.02o.oo 0.03
System size0.00 0.000.00 0.00
Hospital characteristics
Number of beds0.02 o.oo***0.02 o.oo***
Regional location
Northeast- 0.03 0.02**- 0.03 0.02**
South- 0.05 0.01***0.05 0.01***
North Central-0.08 0.01***-0.08 0.01***
SMSA sizea
Under 100,0000.06 0.050.06 0.05
100,000-250,0000.04 0.02**0.04 0.02**
250,000-500,0000.05 0.02***0.05 0.02***
500,000-1 million0.07 0.02***0.07 0.02***
1 million-2.5 million0.07 0.02***0.07 0.02***
Over 2.s million0.06 0.02***0.06 0.02***
House staff0.01 0.010.01 0.01
Constant0.59 0.01***0.s7 0.03***
Model statistics
0-043
4,448
0.043
4,448
aSize of standard statistical metropolitan area (SMSA).
***T is significant at p ' .01.
**T is significant at p ~ .05.
*T is significant at p _ .10.
OCR for page 450
450
FOR-PROFIT ENTERPRISE IN HEALTH CARE
TABLE A-17 What Is the Usual Number of Months for Provisional Appointment Before
a Physician Is Awarded Full Privileges?
System Control Coefficients Relative to-
Freestanding Hospitals
Investor-Owned Systems
Vanables Coefficient Standard Error Coefficient Standard Error
Freestanding hospitals
System characteristics
System control
Religious nonprofit
Secular nonprofit
Investor-owned
Public
Contract-managed
System size
Hospital characteristics
Number of beds
Regional location
Northeast
South
North Central
-
1.11
0.50
0.55
1.39
-0.43
0.00
0.56
0.48
0.010
-0.18
0.37
0.67
0.60
2.05
0.54
0.00
0.09
0.38
0.36
0.35
0.55 0.60
0.56
0.05
0.84
0.98
0.00
0.56
0.48
0.00
.18
0.67
0.86
2.12
0.66
0.00
0.09
0.38
0.36
0.35
SMSA sizea
Under 100,0000.89 0.960.89 0.96
100,000 250,0001.59 0.44***1.59 0.44***
250,000 500,0001.33 0.45***1.33 0.45***
500,000-1 million1.83 0.48***1.83 0.48***
1 million-2.5 million1.92 0.39***1.92 0.39***
Over2.5 million1.56 0.41***1.56 0.41***
House stab- 1.25 0.33***- 1.25 0.33***
Constant6.88 0.32***7.42 0.63***
Model statistics
R2 0.10 0.10
N 1,811 1,811
aSize of standard statistical metropolitan area (SMSA).
***T is significant at p s .01.
OCR for page 451
STAFF SIZE, PRIVILEGES, AND COMPENSATION
451
TABLE A-18 How Many Full-Time and Part-Time Physicians and Dentists Were on the
Hospital Payroll as of September 30, 1982?
System Control Coefficients Relative to-
Freestanding Hospitals
Investor-Owned Systems
Variables Coefficient Standard Error Coefficient Standard Error
Freestanding hospitals 1.53 1.67
System characteristics
System control
Religious nonprofit-1.72 1.17- 0.19 1.93
Secular nonprofit-2.18 1.68- 0.64 2.24
Investor-owned-1.53 1.67
Public46.91 4.47***48.44 4.72
Contract-managed-0.48 1.571.05 1.85
System size0.00 0.010.00 0.01
Hospital characteristics
Number of beds2.41 0.28***2.41 0.28
Regional location
Northeast10.14 1.25***10.14 1.25
South-1.28 1.03-1.28 1.03
North Central0.50 1.050.50 1.05
SMSA sized
Under 100,000-4.79 3.36-4.79 3.36
100,000-250,000-2.67 1.33**-2.67 1.33
250,000-500,000-2.23 1.33*-2.23 1.33
500,000-1 million-4.97 1.36***- 4.97 1.36
1 million-2.5 million0.92 1.19o.9a 1.19
Over 2.5 million6.78 1.20***6.78 1.20
House stay24.19 0.96***24.19 0.96
Constant-1.90 0.97*- 3.43 1.81
Model statistics
R2 0.32 0.32
N S,004 5,004
aSize of standard statistical metropolitan area (SMSA).
***T is significant at p s .01.
**T is significant at p s .05.
*T is significant at p s .10.
OCR for page 452
452
FOR-PROFIT ENTERPRISE IN HEALTH CARE
TABLE A-l9 The Primary Form of Compensation for Anesthesiologists Is a Percent of
Revenue or Fee for Service
System Control Coefficients Relative to
Freestanding Hospitals
Investor-Owned Systems
VariablesCoefficient Standard ErrorCoefficient Standard Error
Freestanding hospitals -1.49 1.07
System characteristics
System control
Religious nonprofit0.53 0.39- 0.95 1.12
Secular nonprofit-0.65 0.46- 2.14 1.14*
Investor-owned1.49 1.07
Public- 2.52 0.96$**- 4.01 1.41***
Contract-managed- 0.52 0.50- 2.00 1.09*
System size0.00 0.000.00 0.00
Hospital characteristics
Number of beds0.09 0.080.09 0.08
Regional location
Northeast-1.20 0.32***-1.20 0.32***
South- 0.12 0.36- 0.12 0.36
North Central-0.14 0.34-0.14 0.34
SMSA sizea
Under 100,0000.50 0.810.50 0.81
100,000-250,0000.46 0.420.46 0.42
250,000-500,0000.12 0.350.12 0.35
500,000-1 million1.11 0.47**1.11 0.47**
1 million-2.5 million0.39 0.340.39 0 34
Over 2.5 million0.18 0.320.18 0.32
House stag- 0.93 0.20***- 0.93 0.20***
Constant2.36 0.34***3.85 1.08***
Model statistics
Pseudo R 0.28 0.28
N 1,234 1,234
aSize of standard metropolitan statistical area (SMSA).
***Chi-square significant at p ' .01.
**Chi-square significant at p ' .05.
*Chi-square significant at p ' .10.
OCR for page 453
STAFF SIZE, PRIVILEGES, AND COMPENSATION
TABLE A-20 The Primary Form of Compensation for Radiologists Is a Percent of
Revenue or Fee for Service
-
System Control Coefficients Relative to
453
Freestanding Hospitals Investor-Owned Systems
Variables
Coefficient Standard ErrorCoefficient Standard Error
Freestanding hospitals - 0.62 0.87
System characteristics
System control
Religious nonprofit1.23 0.49**0.60 0.98
Secular nonprofit-0.24 0.51-0.87 0.97
Investor-owned0.62 0.88
Public-2.23 1.09**-2.85 1.36
Contract-managed0.28 0.74- 0.35 0.96
System size0.00 0.000.00 0.00
Hospital characteristics
Number of beds-0.03 0.07-0.03 0.07
Regional location
Northeast-1.44 0.34***-1.44 0.34
South0.14 0.410.14 0.41
North Central0.01 0.390.01 0.39
SMSA sizea
Under 100,000- 0.05 0.83- 0.05 0.83
100,000-250,0000.08 0.470.08 0.47
250, 0~500, 000-0.60 0 37-0.60 0.37
500,000-1 million0.81 0.520.81 0.52
1 million-2.5 million-0.12 0.37- 0.12 0.37
Over 2.5 million-0.95 0.32***- 0.95 0.32
House staff-0.70 0.20***-0.70 0.20
Constant3.14 0.36***3.76 0.89
Model statistics
Pseudo R 0.41 0.41
N 1,234 1,234
aSize of standard metropolitan statistical area (SMSA).
***Chi-square significant at p 5 .01.
**Chi-square significant at p 5 .05.
OCR for page 454
454
FOR-PROFIT ENTERPRISE IN HEALTH Cow
TABLE A-21 The Primary Form of Compensation for Pathologists Is a Percent of
Revenue or Fee for Service
System Control CoefBicients Relative to
Freestanding Hospitals
Vanables
Investor-Owned Systems
Coefficient Standard ErrorCoefficient Standard Error
Freestanding hospitals - 0.69 0.48
System characteristics
System control
Religious nonprofit-0.29 0.~-0.98 0.50
Secular nonprofit-0.11 0.40- 0.80 0.60
Investor-owned0.69 0.48
Public- 1.57 1.00-2.26 1.09
Contract-managed1.37 0.50***0.68 0.51
System size-0.00 0.00**- 0.00 0.00
Hospital characteristics
Number of beds-0.09 0.05-0.09 0.05
Regional location
Northeast- 2.58 0.23***- 2.58 0.23
South0.10 0.240.10 0.24
North Central-0.28 0.23- 0.28 0.23
SMSA sizea
Under 100,000- 0.03 0~55-0.03 0~55
100,000-250,0000.21 0.280.21 0.28
250,000-500,000- 0.33 0.27- 0.33 0.27
500,000-1 million0.03 0.290.03 0.29
1 million-2.5 million- 0.24 0.24- 0.24 0.24
Over 2.5 million-0.28 0.24- 0.28 0.24
House stem-0.51 0.21***- 0.57 0.21
Constant1.91 0.22***2.59 0.50
Model statistics
Pseudo R 0.48 0.48
N 1,234 1,234
aSize of standard metropolitan statistical area (SMSA).
***Chi-square significant at p s .01.
**Chi-square significant at p s .05.
*Chi-square significant at p c .10.
OCR for page 455
STAFF SIZE, PRIVILEGES, AND COMPENSATION
TABLE A-22 Do Your Anesthesiologists BiD Patients Directly?
System Conko1 Coefficients Relative to
455
Freestanding Hospitals
Variables
Investor-Owned Systems
Coefficient Standard Error Coefficient Standard Error
.
Freestanding hospitals -0.78 0.35**
System characteristics
System control
Religious nonprofit. 0.94 0.22**- 0.33 0.40
Secular nonprofit-0.29 0.34- 1.07 0.47**
Investor-owned0.78 0.35**
Public- 2.49 0.80***- 3.26 0.86***
Contract-managed- 0.40 0.28- 1.17 0.37***
System size0.00 0.000.00 0.00
Hospital characteristics
Number of beds0.54 0.07***0.54 0.07***
Regional location
Northeast-0.49 0.20**- 0.49 0.20**
South- 0.43 0.19**- 0.43 0.19**
Norm Central-0.37 0.18**- 0.37 0.18**
SMSA sizea
Under 100,0001.36 0.64**1.36 0.64**
100,000-250,0000.63 0.23***0.63 0.23***
25O,000-500,0000.95 0.23***0.95 0.23***
500,000-1 million1.01 0.26***1.01 0.26***
1 million-2.5 million1.09 0.21***1.09 0.21***
Over 2.5 million0.95 0.~***0.95 0.22***
House staff- 0.78 0.17***- 0.78 0.17***
Constant-0.19 0.16- 0.58 0.36
Model statistics
Pseudo R 0.38 0.38
N 1,627 1,627
aSize of standard metropolitan statistical area (SMSA).
***Chi-square significant at p 5 .01.
**Chi-square significant at p ' .05.
*Chi-square significant at p c .10.
OCR for page 456
Freestanding Hospitals
Vanables
456
FOR-PROFIT ENTERPRISE IN HEALTH CARE
TABLE A-23 Do Your Radiologists BiD Patients Directly?
System Control Coefficients Relative to-
Investor-Owned Systems
Coefficient Standard ErrorCoefficient Standard Error
Freestanding hospitals -1.26 0.33***
System characteristics
System control
Religious nonprofit0.75 0.19*$*- 0.51 0.37
Secular nonprofit0.31 0.31-0.95 0.43**
Investor-owned1.26 0.33***
Public-0.77 0.73-2.02 0.80**
Contract-managed0.16 0.27-1.10 0.36***
System size0.00 0.000.00 0.00
Hospital characteristics
Number of beds0.29 0.05***0.29 0.05***
Regional location
Northeast0.01 0.170.01 0.17
South0.86 0. 17***0.86 0. 17***
North Central0.44 0.16***0.44 0.16***
SMSA sizea
Under 100,0000.92 0.52*0.92 0.52*
100,000 250,0000.60 0.22***0.60 0.22***
250,000-500,0000.27 0.200.27 0.20
500,000-1 million0.52 0.22**0.52 0.22**
1 million-2.5 million0.46 0.18***0.46 0.18***
Over 2.5 million-0.35 0.18*- 0.35 0.18*
House staff- 0.33 0.00**- 0.33 0.00**
Constant-0.85 0.15***0.41 0.34
Model statistics
Pseudo P 0.29 0.29
N 1,627 1,627
aSize of standard metropolitan statistical area (SMSA).
***Chi-square significant at p c .01.
**Chi-square significant at p ' .05.
*Chi-square significant at p c .10.
OCR for page 457
STAFF SIZE, PRIVILEGES, AND COMPENSATION
TABLE A-24 Do Your Pathologists Bill Patients Directly?
457
System Control Coefficients Relative to
Freestanding Hospitals
Investor-Owned Systems
VariablesCoefficient Standard ErrorCoefficient Standard Error
Freestanding hospitals - 1.43 0.29***
System characteristics
System control
Religious nonprofit0.35 0.19*- 1.08 0.32***
Secular nonprofit0.44 0.33- 0.99 0.42**
Investor-owned1.43 0.29***
Public- 2.10 1.21*- 3.52 1.24***
Contract-managed0.87 0.28***- 0.56 0.32*
System size-0.00 0.00*- 0.00 0.00*
Hospital characteristics
Number of beds-0.00 0.05-0.00 005
Regional location
Northeast- 1.51 0.28***-l.S1 0.28***
South0.95 0.18***0.95 0.18***
North Central-0.03 0.19- 0.03 0.19
SMSA sizes
Under 100,0001.09 0.45**1.09 0.45**
100,000 250,0000.78 0.23***0.78 0.23***
250,000 500,0000.09 0.250.09 0.25
500,000-1 million0.12 0.270.12 0.27
1 million-2.5 million0.42 0.21**0.42 0.21**
Over 2.5 million0.43 0.23*0.43 0.23*
House staff0.42 0.14***0.42 0.14***
Constant- 1.88 0.18***- 0.46 0.30
Model statistics
Pseudo R 0.34 0.34
N 1,627 1,627
aSize of standard metropolitan statistical area (SMSA).
***Chi-square significant at p c .01.
**Chi-square significant at p ' .05.
*Chi-square significant at p 5 .10.
Representative terms from entire chapter:
freestanding hospitals
